The late Alida Elzabe Haskins ("the testatrix") died on 5 December 2012. Probate of her will dated 1 November 2012 was granted on 2 May 2013.
By her will the testatrix left a number of bequests. One of those bequests, and the gift of residue, were in the following terms:
(3) "(a) $500,000 to my son KONRAD HASKINS ("Konrad").
If KONRAD HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his daughter AMELIA HASKINS who survives me, then AMELIA HASKINS upon attaining the age of 25 years takes such legacy which my said son would otherwise have taken.
Prior to attaining the age of 25 years, if and for such time that AMELIA HASKINS is studying on a genuine basis, my Trustees may pay her or on her behalf up to $50,000 per year (or such other amount determined in the absolute discretion of my Trustees) from such legacy for expenses directly and closely related to such study (in the absolute discretion of my Trustees)."
…..
(v) I give the residue of my estate to:
(i) the 'Sam and Alida Haskins Study Grant' as to 10% of the residue of my estate (this being in addition to any other legacy to the 'Sam and Alida Haskins Study Grant' under this my will);
(ii) Konrad as to 55% of the residue of my estate; and
(iii) Ludwig as to 35% of the residue of my estate.
If KONRAD HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his daughter AMELIA HASKINS who survives me, then AMELIA HASKINS upon attaining the age of 25 years takes such legacy which my said son would otherwise have taken.
If LUDWIG HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his son OREN HASKINS who survives me, then OREN HASKINS takes such legacy which Ludwig would otherwise have taken.
Subject to the above, if a descendant of mine has already died or does not survive me or dies before attaining a vested interest, leaving children who survive me, then those children take equally the share which their parent would otherwise have taken."
Konrad Haskins ("Konrad") and Ludwig Haskins ("Ludwig") are the sons of the testatrix. Amelia Haskins ("Amelia") is the daughter of Konrad by his first wife and Konrad was married a second time to Sandra Vandahl ("Sandy") with whom he had no children.
Konrad died on 23 March 2014.
Amelia, for whom Mr L. Ellison SC appears, contends that Konrad died "before attaining a vested interest". Sandy, for whom Mr A. Hill of Counsel appears, contends that Konrad attained a vested interest before he died. The executors, for whom Mr J. Mitchell of Counsel appears, support Amelia's claim. Ludwig, who has been joined to the executors proceedings, does not regard this issue as of any concern to him and makes no submissions. There have been a number of disputes between the executors and Ludwig. Also Konrad brought a claim under s 59 of the Succession Act 2006 (NSW) which proceedings were terminated after his death. The dispute with Ludwig and Konrad's Family Provision claim have prevented or delayed the calling in of assets and distribution and the matter was listed to deal with issues arising from the dispute with Ludwig as well as the dispute between Amelia and Sandy. The disputes between Ludwig and the estate have now been resolved.
The critical question is what is the meaning of the phrase "dies before attaining a vested interest".
Mr Hill characterised the question as being whether the phrase means "vested in interest" or "vested in possession".
There was no dispute concerning the Court's approach to construction. Mr Ellison made reference to the second principle referred to by Isaacs J in Fell v Fell (1922) 31 CLR 268 from Leader v Duffey & Ray (1888) 13 App Cas 294 at page 301:
""The instrument….must receive a construction according to the plain meaning of the words and sentences therein contained. But… you must look at the whole instrument, and inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole, in order to give effect, if it be possible to do so, to the intention of the framer of it" (Lord Halsbury, L.C, in Leader v Duffey; Ward v Brown; Buckley, LJ, in Kirby-Smith v Parnell."
The Court seeks to determine the "expressed intentions" of the testator: see Perrin v Morgan [1943] AC 399 per Viscount Simon LC at p 406 and is constrained by the words actually used: Watson v Ralph [1982] HCA 35; (1982) 148 CLR 646.
The undesirability of focusing on the determination of what particular words mean in other wills has been referred to: see Perpetual Trustee Co Ltd v Wright Re Will of James Paul Gee Cox Junior deceased (1987) 9 NSWLR 18 per Bryson J (as his Honour then was) cited by myself in Reilly v Gengos [2006] NSWSC 139. However where a rule law has affixed a certain determinate meaning to technical expressions
"that meaning must be given to them, unless the testator has by his will excluded beyond all doubt, such construction" (Towns v Wentworth [1858] 11 Moo PC 526 at 542-543 ; 14 ER 794 at 800).
I will endeavour to summarise Mr Hill's extensive submissions as:
1. that Courts lean to holding that "vest" means "vests in interest" not "vests in possession" and there are many cases in which "vest", when used in a will, has been taken to mean "vests in interest" not in possession
2. that the Court could infer that a solicitor had drafted the will and the word "vest" is a term of art
3. that if "vest" meant "vests in possession" an executor could delay the administration of the estate in the hope that a feeble beneficiary would pass away before receiving the bequest or share of residue
4. additional and unnecessary words are often used to add emphasis: In Re Boden [1907] 1 Ch 132; Commissioner of Pay-Roll Tax v R G Elsegood & Co Pty Ltd [1983] 1 NSWLR 223 cited by White J in Austin v Wells [2008] NSWSC 1266 and the words in question here should be treated as surplusage
5. that Konrad had an interest in the legacy and residue from the date of the testatrix's death
Mr Mitchell and Mr Ellison pointed out that:
1. there are many cases in which "vest" has been held to mean vested in possession
2. in Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694; (1964) 112 CLR 12 and Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR the High Court and the Privy Council have authoritatively laid down the nature of the interest of a beneficiary in the will and the property of the estate
3. that even if there is a presumption that a bequest has vested in interest that presumption cannot overcome words that are inconsistent with that presumption
4. that the fact that the will was drawn by a solicitor demonstrates the likelihood that the words used were well chosen to reflect the wishes of the testatrix. The will is obviously one in which there has been considerable attention to detail and the phrase "has already died or does not survive me or dies before attaining a vested interest" occurs in a number of places in the will, not only in relation to Konrad
5. the phrase used by the testatrix concerns itself with the possibilities of death of the particular beneficiary
1. prior to the date of the will
2. prior to the date of the testatrix's death
3. prior to the date on which the beneficiary attains a "vested interest"
The testatrix must have meant the words to have a purpose other than a requirement for Konrad to survive her because (a) and (b) deal with that eventuality
1. in further support of (5) reference is made to the general principle that
"The court does not as a rule import to the testator that he uses additional words without some additional purpose or without any purpose at all."
Williams on Wills, 9th ed (2008) at [50.16] approved in Austin v Wells per White J
A number of cases to which Mr Hill referred such as Gibb-Maitland v Perpetual Executors Trustees and Agency Co (WA) Ltd (1947) 74 CLR 579, Browne v Moody [1936] AC 635 and Girardot & Anor v Perpetual Trustees Australia Ltd & Ors (BC 9802611) 12 June 1998 whilst being examples where the Court has found that a devise had vested (and may be treated as examples of the principle that the Courts lean towards the vesting of interests: see Hume v Perpetual Trustee (1939) 62 CLR 242 at 256 and Re Wrightson Battie - Wrightson v Thomas (1904) 2 Ch 95) are not cases dealing with the construction of the words "vest", "vested" or "vesting".
Cases referred to by Mr Hill in which the word "vest" or "vested" have been held to mean "vested in interest" are Marks v Trustees Executors and Agency Co Ltd (1948) 77 CLR 497, Re Richard Arnold's Estate (1863) 55 ER 329, Hume, Re Faulwasser (decd) [1967] VR 182, Austin v Wells and In Re Edmondson's Estate (1868) LR 5 Eq 389.
Cases referred to by Mr Mitchell and Mr Ellison in which the word "vest" or "vested" has been held to mean "vested in possession" are Greenhalgh v Bates [1870] 2 LR 47 at 50 per Lord Penzance LJ, In re Morris 688 at 690 and obiter in Arnott v Kiss [2014] NSWSC 1385. Reid v Wishart (1898) 16 NZLR 218 was also cited but it I do not think that it falls into this category or assists. However reference can be made to Young v Robertson (1862) 4 Macq. 314, King v Cullen (1848) 2 De G. & S. 252, Sillick v Booth (1842) 1 Y. & C.C. 121 at 126 and Re Morris (1857) 5 W.R 423 all cited in 'Theobald on Wills' (2010, 17th ed, Thomson Reuters) paragraph18-006, which passage is in the following terms:
"If, however, the gift over be to persons living at the time of distribution, there is strong argument that the word "vested" was used as equivalent to vested in possession. So, if the legacies would be vested in interest at the testator's death, and the gift over is, if any of the legatees die during the testator's life or after his decease without attaining vested interests, vested must mean vested in possession. And, in the same way, the testator may show that he used "vested" in the gift over as equivalent to "paid" if the gift over is, if any die before their share should be vested as aforesaid, when only directions as to payments have been previously given. If the testator expressly provides for the death of the legatees in his lifetime, a gift over upon death before vesting refers to vesting in possession."
In Marks the High Court considered the use of the word "vest" in the words of a testamentary trust which provided that if all of the children of any of the testator's four children "shall die (1) before the part shall have become vested in him or her and (2) without leaving lawful issue" the trustees were to hold the share for the children and the issue of any deceased child or others of the testator's four children in equal shares. Williams J, with whom Latham CJ, Dixon and McTiernan JJ agreed (and Starke J as to result), said that:
"The weight of authority would appear to favour the view that in English law vesting means prima facie vesting in interest. But it is unnecessary to examine the authorities because the answer must in every case depend primarily on the context of the particular will. In the present will the word first appears in the third trust which follows two trusts prescribing contingencies upon the happening of which interests are to vest. The context of the will itself therefore gives a meaning to the word and indicates that it is intended to mean vested in interest. If the word is given this meaning the three trusts fit into each other, and operate as a consistent whole."
There were reasons of congruity which led the Court in Marks to accept the construction advanced by the estate of Colin, the deceased grandson of the testator, that Colin's interest had vested in Colin's lifetime because Colin had reached the age of 21 and that it was not divested because Colin had died without lawful issue.
Reference was made to 'Williams on Wills' (2008, 9th ed, LexisNexis Butterworths):
"[93.1]
Meaning of 'vest'. The proper legal meaning of the word 'vest' is to vest in interest, and when a testator uses this word by directing, for example, that the gift is to vest on a certain event, it must in general be given its proper legal meaning, and the gift is then contingent until the happening of that event. This is so whether the gift is real or personal property. The context may show by indications that the donee is to take a vested interest before the specified event, that the word 'vest' is used in some other sense, for example, in the sense of 'fall into possession', or 'become payable', or 'be indefeasibly vested'. In the last case the gift may be vested, subject only to be divested if the event does not happen. A direction with regard to vesting of a gift to a class may, on the construction of a particular will, even introduce a new category of beneficiaries to share in the gift.
[93.2]
Presumption in favour of vesting. In cases where there is a doubt as to the time of vesting, the presumption is in favour of early vesting of the gift and accordingly it vests at the death of the testator or at the earliest moment after that date which is possible in the context, whether the gift is of real or personal property. It is presumed that the testator intended the gift to be vested rather than to remain in suspense. A bequest making no reference to the time of vesting takes effect at the testator's death unless this date would disturb provisions already made in the will, or unless an intention that the bequest shall operate at a later date clearly appears. Since the will is ambulatory until death, the testator cannot make a gift vest at a date earlier than his death: e g at the date of the will, and a provision to that effect does not prevent lapse. The presumption is especially applicable in cases where the interest created is a remainder, or where the donees are the children of a named person as a class or where the gift is of residuary personal or of residuary real and personal property."
Livingston was a case which concerned the question of whether the estate of a beneficiary of the New South Wales will of Mr Livingston was liable to pay Queensland succession duty on property owned by Mr Livingston in Queensland where the will of Mr Livingston had not been fully administered. The Queensland Commissioner of Stamp Duties claimed that the widow of Mr Livingston had succeeded to the Queensland property within the meaning of the Succession and Probate Duties Act 1892 (QLD). The Privy Council, agreeing with the decision of a majority of the High Court, rejected the appeal of the Commissioner and Viscount Radcliffe said at p 17:
"The nature of that interest has been conclusively defined by decisions of long-established authority, and its definition no doubt depends upon the peculiar status which the law accorded to an executor for the purposes of carrying out his duties of administration. There were special rules which long prevailed about the devolution of freehold land and its liability for the debts of a deceased, but subject to the working of these rules whatever property came to the executor virtute officii came to him in full ownership, without distinction between legal and equitable interests. The whole property was his. He held it for the purpose of carrying out the functions and duties of administration, not for his own benefit; and these duties would be enforced upon him by the Court of Chancery, if application had to be made for that purpose by a creditor or beneficiary interested in the estate."
and at p 21 his Lordship cited Viscount Finlay in Barnardo's Homes National Incorporated Association v Special Income Tax Commissioners [1921] 2 AC 1:
"… the legatee of a share in the residue has no interest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is complete"; while Viscount Cave says17: When the personal estate of a testator has been fully administered by his executors and the net residue ascertained, the residuary legatee is entitled to have the residue, as so ascertained, with any accrued income, transferred and paid to him; but until that time he has no property in any specific investment forming part of the estate or in the income from any such investment, and both corpus and income are the property of the executors and are applicable by them as a mixed fund for the purposes of administration." Similar explicit statements of the true position will be found in the judgments of Lord Sterndale M.R., when the Barnardo case was in the Court of Appeal, and of Sir Wilfrid Greene M.R. in Corbett v. Commissioners of Inland Revenue."
Schultz concerned the question of whether a bequest of a property to a person went to the official receiver if the testatrix died at a time the beneficiary had become a bankrupt. The High Court held that the bankrupt had no legal or equitable interest in the property of the estate but rather a chose in action to have the estate administered which right was vested in the bankrupt and which encompassed not only the chose in action but all of the expected fruits of the chose in action. The Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) at p 312 commented on the nature of a beneficiary's rights:
"Not only does the legal ownership in the property not vest in the named beneficiary at the time of death of the testator, nor does the equitable ownership. That emerges from the Privy Council's decision in Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12 ; [1965] AC 694. The reason for this is that, prior to administration of the deceased estate, there is no specific property capable of constituting the subject property of any trust in favour of the beneficiary. It could not be said at that stage what part or parts of the testator's property would need to be realised for the purposes of administration: see CLR at 18, 26-7; AC at 708, 717. So it was held that the beneficiary does not have a proprietary interest in each of the assets which are the subject of the devise or bequest such that he or she can say "this is mine" or "this belongs to me". Although Livingston was concerned with a residuary estate, the observations it contains apply with equal force in the case of a specific bequest or devise. The parties here are agreed on that point."
It needs to be borne in mind that s 61 of the Probate and Administration Act 1898 (NSW) ("the PAA") provides that on death of a person and before probate is granted the assets of the deceased "vest" in the NSW Public Trustee. S 44 of the PAA provides that on the grant of probate (or administration) "all real and personal estate" passes to and becomes vested "in the executor to whom probate has been granted" (or the administrator).
I accept that the Courts lean toward finding that a gift or devise has vested rather than not: see 'Williams' above and Hume supra [12] but the question is what did the testatrix intend here.
In Beattie v Sainsbury [2003] NSWSC 499 Young CJ in Eq (as his Honour then was) held that the expression "vested interest" in that will was otiose: see [9] and [18].
In Austin v Wells the bequest was for the balance to be held on trust "for my niece… such balance to vest in my said niece upon her attaining the age of thirty (30) years". White J said:
"[32] The meaning of the word "vest" in cl 4(c) is ambiguous. Prima facie it means vesting in interest and if there were a gift over in the event of Ms Matthews' not attaining the age of 30, I would so construe it. However, in the absence of a gift over, to avoid the possibility of an intestacy, the word should be construed as meaning "vest in possession". That construction is reasonably open and is therefore to be preferred."
In Arnott v Kiss at [41]- [43] Hallen J said:
"[41] However, unless there is, in the will, an express intention to suspend, or postpone, vesting, a gift to persons already in existence is construed to vest immediately on the testator's death. In Duffield v Duffield (1829) 3 Bligh (NS) 260; 4 ER 1334, Lord Eldon wrote:
"The rights of the different members of families not being ascertained whilst estates remain contingent, such families continue in an unsettled state, which is often productive of inconvenience, and sometimes of injury to them. If the parents attaining a certain age be a condition precedent to the vesting estates by the death of their parents, before they are of that age, children lose estates which were intended for them, and which their relation to the testators may give them the strongest claim to.
In consideration of these circumstances, the judges from the earliest times were always inclined to decide that estates devised were vested; and it has long been an established rule for the guidance of the Courts of Westminster in construing devises, that all estates are to be holden to be vested, except estates, in the devise of which a condition precedent to the vesting is so clearly expressed, that the Courts cannot treat them as vested, without deciding in direct opposition to the terms of the will. If there be the least doubt, advantage is to be taken of the circumstance occasioning that doubt; and what seems to make a condition, is holden to have only the effect of postponing the right of possession."
[42] In other words, where there is a doubt about the time when a gift shall vest, there is a presumption that the testator intended the gift to be vested, subject to being divested, rather than it remain in suspense: Hickling v Fair [1899] AC 15, at 27. This is said to be a presumption in favour of early vesting.
[43] The rules of construction, to which I have referred, must give way to a plain indication in the will as to the deceased's intention. Such a contrary intention may be found, in a will, for example, by the deceased referring to the possibility of the beneficiaries dying "before attaining a vested interest", or the trusts of a share, or shares, failing, because "no person attains a vested interest in that share"."
Each of the parties relied on parts of that Judgment. Mr Mitchell and Mr Ellison emphasised [43] since although obiter, Hallen J clearly recognised that the words "before attaining a vested interest" would evince a contrary intention. Mr Hill relied on [41] - [42] because his Honour accepted that there is a presumption that the testator intended the gift to be vested.
Mr Hill contends that "vest" is a technical term, meaning "vested in interest" and that it is not ambiguous but the fact that there are cases in which the word "vest" has been interpreted to mean vested in possession and cases in which it has been held to mean vested in interest demonstrates that the phrase is not a term of art mandating a conclusion favourable to one or other of Amelia or Sandy.
In 'Williams on Wills' at [50.16] there is the following statement of a rule of construction supported by authority:
"A will must be so construed that effect is given to every word. The court has no right to disregard a word provided some meaning can be given to it, and that meaning is not contrary to some intention plainly expressed in other parts of the will. The court does not as a rule import to the testator that he uses additional words without some additional purpose or without any purpose at all."
and see to similar effect 'Construction of Wills in Australia' (2007, LexisNexis Butterworths) by David M Haines QC at 2.32 and the cases there cited.
The interpretation which was advanced on behalf of Sandy renders the words "dies before attaining a vested interest" as superfluous- since if they had been omitted Konrad would have obtained an unqualified interest. The words incorporated have a meaning and are not contrary to some intention plainly expressed elsewhere in the will and in my view require that the estate must have been administered to the point that the executors are ready (or ought to be ready) to distribute the relevant amount to Konrad. That was not possible before the time that Konrad died.
In respect of Mr Hill's argument set out at 10 above, if an executor or administrator were to delay administration of the estate in order to avoid a distribution because he or she believed that the named beneficiary might expire before the date of distribution and hoped thereby to benefit the recipient of the interest who would take in such circumstances that would entail a dereliction of duty and could expose the executor to civil claims by the estate of the person who would have benefited had the estate been properly administered. I do not think the possibility of aberrant conduct of an executor can govern the meaning of the phrase.
There is, in the present case, no risk of partial intestacy because there is a gift over to Amelia. Nor is there any incongruity as would have been created by the will under consideration in Marks. This is not a case in which the words used involve a contingency such as "if X attains the age of 30" or "if X has lawful issue". Rather it is the words "if Konrad dies before he attains a vested interest" that create the contingency.
There is nothing incongruous in a testatrix wishing to bestow upon her granddaughter a bequest that was intended to go to her son if by the time the estate is ready to be distributed the son has died. The practical consequences of that provision, so interpreted, is that the gift or legacy can go directly and immediately to the granddaughter without her having to await the administration of her father's estate. The provisions of the PAA coupled with explanation of the true interest of a beneficiary assist in the conclusion that the testatrix understood that the interest which she intended to give to Konrad might not vest before his death even if he survived her.
I do not think that there is any scope for the operation of a presumption here because I am of the view the words "dies before attaining a vested interest" in the context of this will evince an intention that the bequests were not to take effect on the death of the testatrix. This is supported by the passage in 'Theobold' and the cases there cited to which I have referred in [14] particularly King v Cullen where at p 114 the Vice Chancellor said by the word "vested" in the phrase "before the part or share, so bequeathed to them as aforesaid, shall become a vested interest":
"Something beyond surviving the testator is therefore intended."
If the provision had been to Konrad "if he shall survive me" then on the death of the testatrix, Konrad would be regarded as having a vested interest of which his estate would not be deprived on his death. The addition of the words "dies before attaining a vested interest" indicate that merely by surviving the testatrix he would not be treated as having a vested interest and that more was required, and recognise that, in accordance with Australian law a beneficiary does not have any interest in any particular asset or fund or money until the estate has been administered and the executors are ready to distribute.
Conclusion
In my view Konrad had not attained a vested interest within the meaning of the will in the $750,000 legacy or the share of residue as at the date of his death, and a declaration to that effect should be made.
Costs
The parties agreed (quite sensibly in my view) that whatever the outcome of the construction point the costs of both Sandy and Amelia should be paid out of the estate.
[3]
Amendments
22 September 2015 - Typographical corrections
22 September 2015 - Typographical correction
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Decision last updated: 22 September 2015